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Comment by intopieces | Hacker News Reader

This response comes up every single time this statistic gets posted. I assure you that your condition is not typical for the 69% mentioned in the statistic quoted.

"The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?"

http://www.theatlantic.com/magazine/archive/2016/05/my-secre...

1 in 3 Americans has $0 saved for Retirement, and 56% have less than $10,000

http://time.com/money/4258451/retirement-savings-survey/

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I agree with the conclusion, but do not think you can get their just by looking at how people would pay for a $400 emergency.

For example, in my financial situation, I would borrow to cover an unexpected $400 expanse. However, that is because I have a prior agreement with my parents that they would loan me (at 0% interest) to cover unexpected expenses, so I have no reason to keep a surplus of money fully liquid when it could be earning better returns elsewhere.

My parents, for their part, base their savings on the assumption that they would cover unexpected expanses from their line of credit secured against their house. This, again, is not because they do not have the money to set aside for emergencies, but because they think that the opportunity cost of keeping the money liquid outweighs the cost of occasionally paying on credit. As it happens, they could pay for a $400 emergency out of pocket, but that is mostly because they are too rich to micromanage at the $400 dollar level.

With respect to retirement savings, I do not think that stat is as bad as it first appears (although I do think the typical American is underrepresented for retirement). The basic financial story is:

1) take on debt for big, lifetime purchases (education and a house).

2) Pay of debt

3) Accumulate wealth

4) Retire and live off of accumulated wealth

Given this, it is not unreasonable that young people would have no money set aside for retirement, because it might be more efficient to use that money to pay off debt.

I don't care what kind of plan B you have, having $500 or $1000 cash seems like common sense. What is the opportunity cost of $1000 not in the stock market... $50 a year?

Yes, that comment was ridiculously out of touch.

That's fantastic you have a safety net with your parents, with amazing credit, that can borrow at good rates, at any time.

What about the people paying double digit interest rates to get a crappy used car? People who can't borrow money because of no credit, without their parents to cover extreme interest rates?

It's great that some people have the luxury to somehow not have an emergency fund, but a huge portion of the population is unable to do that. The last thing they care about is return on investment in savings-they need money to get food next week.

Thanks for that retirement savings link; been looking for that data.

Yeah, forget the saving account. Retirement is going to be the real issue. Lot of people going to be eating dog food in the future.

Pensions for anyone under 45 are pretty much non existent, with a few exceptions. Even if they are, the companies tend to screw with them. Our company just froze the salary for pension calculations (not that I have one), so somebody could work another 20 years and retire at a percentage of today's pay.

At least I get a crappy annuity and 401k matching. New hires now get neither.

You get at least something from social security, which every worker pays to sustain, and society then promises to keep going. (Worker/retiree ratio changes are going to be a problem.) Thus, retirement savings is not the top problem.

However, the truth is that a majority of Americans worry about how to pay food and rent every month. This is not because they are all irresponsible human beings, but because American society makes it really freaking terrible to be in the bottom half. Retirement is out of reach; saving for an emergency has to fight with rent has to fight with prescription medications has to fight with clothes for your kids.

Millions of government workers have pensions. Most of them are quite generous.

Fair enough - but, given the fascination a lot of people have with owning their home (which I do not), you would also have to include any positive equity (which can be leveraged in a number of ways) in their property in this scenario.

I guess the question I would have is "What is the 10th/25th/Median percentile of net-liquidity" and "What is the expected downstream third-party income from Social Security/Pensions/etc..." expected. That paints a fuller picture of people's financial stability, and also identifies how important Social Security is to their wellbeing.

Home owners are not in the bottom half.

What do they mean by "borrowing"? Is it actually borrowing money from friends and neighbors or is it using a credit card because it is convenient?

It's both -- but not because it's "convenient" but because it's the only possible source. The minimum payment will then multiply the cost over many years.

I hope that distinction was made during the survey. From reading the article, I didn't get that feeling.

If I had to pony up $400, I would definitely use a credit card because its what I have on me.

This just tells you there are a hell of a lot of stupid people out there. In no reality are 47% of Americans in the position of not being able to save $400 due to external circumstances.

On the other hand, I know a few Americans who have more than that in cash in their wallet, and although they are probably not average, they are not what I'd describe as wealthy either.

While I don't doubt this, the chance they are in the upper sector is pretty high especially with the wealth concentration being in the top few % (from my understanding).

I feel the descriptor of middle class has moved away from X% disposable income and that you are describing a 'traditional' middle class. I do not live in the US however and could be tainted by my personal experience in AUS.

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